#BringBackBillions Bringing Back the Black Money – Part 1

#BringBackBillions Part 1 of a series on the efforts of different countries in bringing back the illegal assets from tax havens

Ever since the Modi government rode to power with the promise of bringing back the billions stashed away by Indians in tax havens abroad, they have been constantly reminded of this promise. The National Democratic Alliance (NDA) drafted a new Black Money Act on May 11, 2015 and also announced a voluntary disclosure scheme till 30 September for declaring assets and until 31 December 2015 to pay tax at 30% and penalty at 30%. In October, the government announced that it had collected Rs. 4147 crores ($623 million) as part of this scheme. Various estimates put the amount of Black Money from India at anywhere between $181 billion to $1.8 trillion dollars. Regardless of which estimate one takes, the fact remains that even a fraction of the amount abroad has not been recovered. Within India, Black Money constitutes about 40% of the Gross Domestic Product (India’s GDP is expected to be $2.4 trillion in 2016). There are 70 countries that maintain secret banking and are also referred to as Tax Havens.

In the video above, Dr. Subramanian Swamy describes four ways in which the Black Money can be brought back to India:

  1. Do as the Americans did – jail the highest ranking official of an International Bank in India and ask them for the details of the Bank accounts of all Indians. If they refuse, put them in jail. This was done to the Swiss and they complied within 2 days.
  2. Like Germany, India can bribe a high ranking official of an international bank and get the information from a tax haven such as Lichtenstein Bank. The French did the same thing to Hongkong Shanghai Bank (HSBC).
  3. Using DTAA Double Taxation Avoidance Act, a small part of Black Money can be recovered by exchanging information between sovereign tax authorities. Only future violations will be attracted by this way.
  4. According to a United Nations (UN) resolution, if any country wants the details of all the holdings of its citizens in the tax havens, then the country has to pass a law nationalizing their assets abroad. Once this law is passed, the UN resolution can be used to get the details of the accounts from any tax haven. Philippines, Egypt and Libya have already taken this approach.
In a recent speech at the Indian Merchants’ Chamber Mumbai, Dr. Swamy said that the Prime Minister favored using the fourth approach listed above to recover Black Money from abroad.

Conclusion

In this series, we will describe the results of three nations, Philippines, Egypt and Libya in their efforts to bring back the ill-gotten wealth of their dictators from tax havens. Philippines presents an interesting scenario as Marcos was deposed almost thirty years ago!

Click here for the next part in #BringBackBillions Part 2 – How Marcos made his billions

Note:

  1. The conversion rate used in this article is 1 USD = 66.53 Rupees.
  2. Text in Blue points to additional data on the topic.
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Sree Iyer

An inventor and out-of-the-box thinker, Sree Iyer has 37 patents in the areas of Hardware, Software, Encryption and Systems.

His first book NDTV Frauds has been published and is an Amazon Bestseller.
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3 COMMENTS

  1. Dear Mr. Iyer, please could you shed some light or rather your take on why Modi is so hesitant to act against the scamsters of UPA, why isn’t he appointing Dr.Swamy as the finmin, why is he so enamored with Jhootly.

  2. PM Modis anti corruption credentials have been deeply dented by the fact that several FINMIN bureaucrats are actively involved in protecting the scmasters in Aircel Maxis case, NSEL scam and god knows which other scams. Given two years in power not a single scam has been taken to its logical conclusion or a scamster prosecuted. I doubt that with Jhootly heading finmin anything will be done, we need Dr. Swamy the anti corruption crusader to be at helm of finmin, which for some reason Modi is dithering from.

  3. The Indian Govt may fight shy of adopting the first three measures but the fourth option can be implemented with little will power. If not done questions can naturally be raised about its commitment to recover black money including protection of vested interests.However the vast domestically generated black money can only be tackled by 1.Withdrawal of 500,1000 denomination notes,2.Making any purchase beyond 5000 payable only through a bank instrument or equivalent, 3.Strictly accounting for quantity /number of goods produced/units sold and taxes paid.Any goods/service sold without proper cash memo/invoice without accounting /taxes paid must become liable for confiscation at any stage with arrest of the seller and the buyer.

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